"It’s clear that the sector will not be able to rely on individual ‘Buy to Let’ landlords alone to house the renters of tomorrow, as it did for the past two decades. The market is consolidating, as rental homes switch hands from small to large landlords."
- Guy Whittaker - Savills
New research from Savills, Legal & General (L&G), and the British Property Federation (BPF) highlights a critical shift underway in the private rented sector (PRS), as individual landlords continue to exit the market faster than new properties are being added.
According to analysis by Savills, the decline in available rental homes is most pronounced in suburban areas across the UK. The research shows that rental listings remain 31% below 2018/19 levels, with suburban locations particularly affected due to their popularity among families. This growing imbalance between supply and demand is raising concerns about the sustainability of the current rental landscape.
The report identifies the build-to-rent (BtR) sector as a key part of the solution. Although BtR has delivered 130,000 new rental homes over the past ten years, the volume has not kept pace with the scale of landlord sales, underscoring the urgency for policy measures that promote institutional investment. The findings suggest that local authorities could play a pivotal role by including support for rental housing in their Local Plans, helping to bridge the supply gap.
As small-scale landlords continue to leave the market, institutions and large professional landlords are well-positioned to take on a greater share of rental provision, the research suggests. Data from the English Private Landlord Survey reveals that only 20% of homes in 2024 were owned by landlords with a single property, a sharp decline from 40% in 2018. The trend is expected to continue, driven by incoming regulation such as the Renter’s Rights Bill and enhanced Minimum Energy Efficiency Standards (MEES), both of which will introduce additional costs for landlords.
The report indicates that many institutions and large portfolio landlords operate through limited company structures, giving them a relative advantage in dealing with these regulatory shifts and managing properties at scale.
“There is an urgent need for greater investment in the private rented sector,” said Guy Whittaker, head of build-to-rent research at Savills. “It’s clear that the sector will not be able to rely on individual ‘Buy to Let’ landlords alone to house the renters of tomorrow, as it did for the past two decades. The market is consolidating, as rental homes switch hands from small to large landlords.
“Our report has identified that housing need is particularly pressing in suburban markets, which continue to experience significant supply shortages. Institutional investors have an important role to play in replacing homes lost from the rental market, meeting growing demand for rented homes and improving the overall quality and sustainability of homes for future generations. In Germany and the USA, over a third of rented homes are owned and managed by institutions that have delivered rented housing in these countries for decades, and we believe the UK is on a similar journey.”
David Reid, managing director of L&G suburban build-to-rent, explained, “The build-to-rent sector has consistently proven its value to investors, offering robust and defensive income streams ideal for patient capital investment. As a business, we are dedicated to providing high-quality rental housing for families, and we see this as a significant opportunity for investors to address an urgent market gap.”
Kate Butler, assistant director of policy (real estate) at the BPF, commented, “The findings of this report demonstrate beyond doubt why we need to see the continued expansion of the build-to-rent sector providing high-quality homes across multiple price points.
"While the increasing transfer of PRS homes into owner-occupation is good for increasing levels of homeownership, it negatively impacts those seeking choice in where they wish to rent and at what price. Given the role that housing, especially rental housing, has to play in supporting and sustaining economies, it is critical that a positive investment climate for these new forms of rental homes is maintained, and local authorities and policymakers are continually encouraged to embrace it.”
